LED industry - Thousands of piles of snow rolled up in Langtaosha With the fragrance of osmanthus in August, the LED industry is also ushering in the harvest season. In 2014, the LED lighting market sprouted and grew rapidly like seeds that had survived hibernation. Its capacity was significantly expanded and continued to grow due to factors such as the mass entry into force of incandescent lamp phase-out plans in major countries and regions such as China, the United States, and the European Union, cost reduction drivers, and terminal price declines. LED lighting has entered a historic turning point. On the one hand, traditional lighting is gradually being replaced. For example, Osram Lighting Co., Ltd. of Germany announced that it will lay off 7,800 people in Germany and outside Germany in order to reduce expenses. The reason is that the sales of traditional businesses such as traditional light bulbs and fluorescent tubes are not satisfactory. On the other hand, driven by policies, LED lighting has developed rapidly, prices have dropped by 30% annually, and some industry standards have been implemented one after another. Institutions are investigating LED companies to find investment targets, companies are expanding production non-stop, and waves of mergers and acquisitions are rising one after another, and the related industry chain is generally improving. The total output value of semiconductor lighting in Guangdong Province reached 154.546 billion yuan in the first half of the year, a year-on-year increase of 23.47%.
The stock prices of companies in the LED industry bucked the trend and soared. 80% of LED companies reported good results in their semi-annual reports, showing overall growth. However, due to different business methods, the results of a few listed companies are not ideal, and they even suffer losses. But there is no need to worry too much. From the financial statements, companies can see their own shortcomings, and they can also learn from the strengths of their peers, seize development opportunities, adjust strategies, and strive to set another high record in the second half of the year. Table 1: Brief annual report of Hangzhou Yuanfang Optoelectronics Information Co., Ltd. for the first half of 2014 (data source: Summary of Yuanfang Optoelectronics' 2014 semi-annual report) From the above table, we can see that the operating income of Yuanfang Optoelectronics has increased to a certain extent in the first half of 2014. It was 7963 in the same period last year and 9271 this year, an increase of 16.43%. The net profit attributable to shareholders was 44.11 million yuan, an increase of 11.52% from 3956 yuan in the same period last year. At the end of the reporting period, total assets were RMB 1,057.23 million, an increase of 1.72% from the beginning of the year.
Regarding the reasons for the change in performance, Yuanfang Optoelectronics said that the industry development is generally stable and the company's operating situation is good. During the reporting period, the contribution of non-recurring gains and losses to the company's net profit is expected to be approximately 4.45 million yuan, mainly investment income and government subsidies.
Yuanfang Optoelectronics is deeply involved in the LED lighting laboratory equipment market, increasing the research and development of new products, and launching high-end products such as the TRA-200 LED thermal resistance structure analysis system and the SPIC-200 spectral color illuminance meter, further enriching the company's product series. In addition, the company also uses scientific research platforms such as academician workstations, postdoctoral workstations, and provincial engineering centers to actively promote research and development projects such as color measurement instruments and terahertz spectrometers to prepare technical reserves for the company's future development. Yuanfang Optoelectronics launched a new product in the second half of 2013 - LAT-2000, an integrated equipment for automatic aging detection of LED lamps. The launch of this product has enabled the company to enter the field of LED lighting online testing equipment. Although it currently accounts for a relatively low proportion of the company's revenue, the product has good growth potential and is expected to achieve increased sales in 2014, which may become a highlight of the company's performance growth. Compared with the company's original LED lighting laboratory testing equipment market, the online testing market is a broader market, which is about 5-6 times the size of the laboratory testing equipment market.
With the advancement of technology, the price of LED lighting will be further reduced, and the LED lighting industry will usher in another period of development opportunities taking advantage of the favorable policies. In order to seek new business growth points, Yuanfang Optoelectronics issued an announcement at the beginning of this year, saying that the company or its wholly-owned subsidiary planned to acquire the relevant assets of Advanced Optoelectronics Equipment (Shenzhen) Co., Ltd. in the form of cash. After the acquisition is completed, it will obtain the fixed assets and intangible assets of Advanced Optoelectronics, and the total transaction price (including tax) will not exceed 65 million yuan. Advanced Optoelectronics is mainly engaged in the research and development, production and sales of LED die-bonding machines and other equipment. It has obtained certain patents and other intellectual property rights and is in the same LED industry field as the company's main business. If the transaction is successfully completed in the future, it will help the company expand related businesses and enhance its ability to develop and manufacture LED core equipment. Through this, the company is expected to enter the ranks of LED production equipment system integrators. The company's future development prospects are optimistic. Table 2: Brief annual report of Han’s Laser Technology Co., Ltd. for the first half of 2014 (data source: Han’s Laser 2014 semi-annual report summary) Table 2 shows that Han’s Laser’s operating income in the first half of 2014 was 2.292 billion yuan, a year-on-year increase of 10.99%; the net profit attributable to shareholders of listed companies was 241 million yuan, a year-on-year increase of 30.51%. Han's Laser's main business is the research and development, manufacturing and sales of laser processing equipment. As for the reasons for the performance growth, Han's Laser said that it was mainly due to the market recovery in the consumer electronics field and the company's orders for various products increased significantly. At the same time, Han's Laser expects net profit from January to September to be 476 million to 571 million yuan, a year-on-year increase of 50%-80%. From the beautiful "report cards" of Yuanfang Optoelectronics and Han's Laser, it can be seen that the field of LED equipment is "increasing profits and increasing revenue." In 2013, due to the overestimation of the lighting market a year ago, many testing equipment manufacturers increased investment. The industry's situation of hot industry and cold market has not been improved, and the sales situation of testing equipment manufacturers is not ideal. With the rapid development of my country's semiconductor lighting industry, the industry has increased its attention to international standards trends, which has also brought huge demand to the LED testing equipment market. LED equipment manufacturers have actively invested in research and development and have the courage to innovate. While contributing to the domestic equipment catching up, they have also achieved good results. In the future, the potential and advantages of the LED testing equipment market will continue to develop. If enterprises continue to work hard, the expected goals will be achieved. Upstream LED sapphire field: “Some are happy and some are sad” Table 3: Brief annual report of Tiantong Holdings Co., Ltd. for the first half of 2014 (data source: Summary of Tiantong Holdings’ 2014 semi-annual report) Table 3 reflects the operating conditions of Tiantong Co., Ltd. in the first half of 2014: the company achieved total operating revenue of 572 million yuan, a year-on-year increase of 2.56%, and net profit increased from a loss of 9.8 million yuan in the same period of 2013 to 15.93 million yuan this year, achieving a turnaround from losses to profits. In the context of losses last year, it is rare to achieve such results. Tiantong Co., Ltd. stated that the solar photovoltaic industry achieved sales revenue of 17.39 million yuan and product sales gross profit of -3.5 million yuan during the reporting period. The overall operating situation was basically the same as the same period last year. Because the photovoltaic industry has been in a state of loss, the company has successively divested it through leasing or transferring. Currently, it only retains the construction of small photovoltaic power stations and related businesses. At the same time, sapphire materials are the focus of the company's current investment. The sapphire material industry is an emerging industry that Tiantong Co., Ltd. focuses on building. During the reporting period, it achieved sales revenue of 38.05 million yuan and product sales gross profit of 4.56 million yuan, an increase of 31.78 million yuan and 8.27 million yuan respectively over the same period last year. In recent years, with the joint efforts of scientific researchers and production personnel, Tiantong Co., Ltd. has made breakthroughs in crystal growth technology through introduction, absorption, digestion, and re-innovation, taking the lead in achieving 90kg mass production. Table 4: Brief annual report of Dongjing Electronics Co., Ltd. for the first half of 2014 (data source: Summary of Dongjing Electronics’ 2014 semi-annual report)
Table 4 shows the financial performance of Dongjing Electronics in the first half of 2014. The total operating income showed an upward trend, rising from 138 million yuan last year to 147 million yuan this year, a year-on-year increase of 6.46%; while the profit dropped significantly, with a loss of 34.1666 million yuan.
As for the main reason for the performance loss, Dongjing Electronics said that during the reporting period, the market competition for quartz crystal components was fierce and product prices dropped; the LED sapphire substrate project has a good market prospect. Since the company has not yet formed large-scale production capacity, fixed costs are high, and the development of production capacity and market expansion directly affect the mid-term performance.
The main business of Dongjing Electronics and its holding subsidiary Dongjing Ruikang, quartz crystal components, accounted for 83.54% of the company's total operating income during the reporting period.
The company's subsidiaries Zhejiang Dongjing Optoelectronics, Huangshan Dongjing Optoelectronics, and Dongjing Bolante are mainly engaged in the research and development, design, production and sales of LED sapphire ingots, LED sapphire substrates, and LED patterned sapphire substrates, and belong to the upstream link of LED. During the reporting period, the above three subsidiaries were all in the small-volume trial production stage, and the company's main business and its structure remained unchanged.
Dongjing Electronics expects a performance loss of 66 million yuan to 62 million yuan from January to September 2014. We see that “the LED sapphire substrate project has a good market prospect”, which means that in the future, the company will form large-scale production capacity, develop its efforts in the sapphire field, and turn losses into profits in the next spring. Table 5: Brief annual report of Tianlong Optoelectronics Equipment Co., Ltd. for the first half of 2014 (data source: Summary of Tianlong Optoelectronics 2014 Semi-annual Report) Denon Optoelectronics’ total operating income in the first half of 2014 was 62.6804 million yuan, a year-on-year decrease of 63.04%, and its net profit loss was 53.8846 million yuan, a year-on-year decrease of 742.80%. Tianlong Optoelectronics suffered losses for two consecutive years in 2012 and 2013, and suffered a loss of 53.8846 million yuan in the first half of 2014. The company expects a loss of 37 million to 42 million yuan in the first three quarters of 2014. If losses continue in 2014, its shares may be suspended from listing after the disclosure of the 2014 annual report. In this regard, Denon Optoelectronics said that due to the continued downturn in the industry environment, the company's sales orders have dropped sharply; the disposal of idle assets in the third quarter has not been fully completed, and the company's inventory will have a certain turnover in the second half of the year. It is estimated that the impact of non-recurring gains and losses on net profit from January to September is 350,000 yuan, and the impact of non-recurring gains and losses on net profit in the same period last year is 20.94 million yuan.
2014 is already halfway through, what can you do to save Tianlong Optoelectronics? Tianlong Optoelectronics stated that it will actively turn around inventory pressure; further dispose of idle assets and seek relevant support to strive to turn around losses for the year. As of the end of June, the company's inventory was 377 million yuan, a further increase from 353 million yuan at the beginning of the year.
2014 is a very critical year for Denon Optoelectronics. During the reporting period, the company's main business did not improve significantly and sales were low, which increased financial pressure to a certain extent. Despite this, the company has not given up on its goal of turning around losses throughout the year. Securing large amounts of product sales orders, digesting inventory, and disposing of assets are the main measures to turn around losses throughout the year. At present, the company has received a certain number of orders for polycrystalline furnaces. If the contract is successfully implemented this year, it will bring certain profits to the company while digesting the inventory. Compared with the photovoltaic market, the LED industry has developed rapidly this year, and the sapphire market demand has continued to grow. The company has seized the opportunity to expand sapphire furnace sales. At present, the company has mastered two different crystal growth methods: bubble growth method and guided mold method. The company will further accelerate product upgrades to guide market demand.
During the reporting period, driven by sapphire market demand, Denon Optoelectronics’ sapphire furnace sales achieved a slight increase. Table 6: Brief annual report of Yi Jing Optoelectronics Co., Ltd. for the first half of 2014 (data source: Summary of the 2014 semi-annual report of Yi Jing Optoelectronics Co., Ltd.) In the first half of 2014, Yijing Optoelectronics achieved operating income of 1.269 billion yuan, a year-on-year increase of 6.97%; net profit attributable to shareholders of listed companies was 103 million yuan, a year-on-year increase of 1933.61%. According to the announcement, Yi Jing Optoelectronics is planning to invest in the construction of a 4" sapphire ingot project with an annual output of 750,000 mm. After the completion of the project, the after-tax internal rate of return is expected to be 30.44%. Regarding the rapid performance improvement, Yi Jing Optoelectronics stated that the performance growth during this reporting period was mainly due to the industry recovery and the company's active response measures. In the field of sapphire crystal ingots, after years of research and development, the company now has mature and reliable sapphire crystal ingot growth technology. At the beginning of 2014, the energy consumption of crystal growth in the experimental furnace was reduced by 25%. The sapphire crystals produced have passed the testing and evaluation by relevant institutes of the Chinese Academy of Sciences. After research, the company's board of directors decided to invest in the construction of a 750,000 mm 4" sapphire ingot project with an annual output of 750,000 mm. The total project investment is expected to be 132 million yuan. The investment in this project will help broaden the company's business scope, enhance the company's ability to resist risks, and accelerate the company's development. On August 26, the Shanghai and Shenzhen stock markets generally corrected, and the sapphire concept and the Yangtze River Economic Zone concept became the only hot spots in the market. As a result, the wind sapphire index rose 2.59% throughout the day, closing the fourth consecutive positive line in the recent past. Yijing Optoelectronics, which has mature and reliable sapphire ingot growth technology, Taking advantage of the trend, it hit the daily limit. As of the close, the stock closed at 13.55 yuan, setting a new high for the year. Table 7: Brief annual report of Crystal Optoelectronics Technology Co., Ltd. for the first half of 2014 (data source: Crystal Optoelectronics 2014 Semi-annual Report Summary) Table 7 reflects the financial situation of Crystal Optoelectronics’ 2014 semi-annual report. The operating income was 435 million yuan, a year-on-year increase of 53.85%; the net profit was 82.2594 million yuan, a year-on-year increase of 44.97%. Crystal Optoelectronics stated that the revenue growth was mainly due to the increase in sales of components and sapphire LED substrates for smartphones in this period. Judging from the company's revenue structure, the sapphire business (LED substrate and others) achieved revenue of 86.627 million yuan, a year-on-year increase of 62.88%, and the gross profit margin was 28.30%, a slight decrease of 0.33%. Crystal Optoelectronics stated that in the first half of 2014, the company achieved good operating results in the first half of 2014 through the effective implementation of strategies, steady advancement of industrial layout and strengthening of basic management in accordance with the annual operating policy. Due to the rapid growth of blue glass component products and sapphire patterned substrate business, as well as the company's completion of the merger and acquisition of Yeshili, the scope of mergers has increased. Crystal Optoelectronics is expected to achieve a net profit of 121 million yuan to 148 million yuan from January to September 2014, a year-on-year increase of 30% to 60%. Since there are many companies related to LED sapphire and companies publish their semi-annual reports at different times, I will not introduce them one by one here.
Due to the accelerated popularity of LED lighting and the expansion of sapphire application fields, the sapphire industry has entered a booming cycle. LED sapphire is a single crystal of aluminum oxide. Currently, there are only two substrates that can be used for commercialization. In addition to expensive silicon carbide, 80% of global LED companies use sapphire substrates.
With the demand for Apple products, sapphire has opened the door to application in the field of consumer electronics. The price of LED sapphire began to decline rapidly in 2011. The continuous adjustment of downstream production affected the upstream supply and demand relationship. It was not until the sales of chip manufacturers improved in the first quarter of 2014 and demand accelerated that the price of sapphire began to rebound. In particular, the price of ingots continued to rise.
With the development of technology and the continuous release of production capacity, sapphire substrates are gradually developing from 2 inches to high added value such as large size (4 inches to 10 inches) and high power. At present, major manufacturers in Europe, the United States, Japan, and Taiwan have begun to deploy large-size manufacturing. The relatively mature sapphire substrate technology can produce scale effects in the process of producing large-size crystals to reduce the overall cost, and ultimately expand the application scope of sapphire. Under this trend, there will be a situation where the big one is Evergrande. Companies with lower costs, technological advantages and quality standards will have the most competitive strength to become the leader of the sapphire industry. The demand for sapphire has also driven the related materials and equipment market to boom. The upstream and downstream integration of the sapphire industry chain has accelerated. At the same time, the vertical integration of sapphire substrates and epitaxial chips in the LED industry chain has also intensified. In terms of market space and capacity, the sapphire industry is still in its infancy and is full of hope like the rising sun. LED companies will make full use of their own advantages, find the right business strategies, and put more effort into technological innovation, and they will definitely have great potential. Of course, striving to obtain core technology patents is an aspect that companies cannot ignore. The market competition is fierce. If a company cannot maintain a certain level of competitiveness, it will easily be eliminated. In addition, crystal prices fluctuate greatly, but as long as the company's process technology is mature, management is excellent, and the market is stable, profits will not deviate too much from the expected target.
Currently, although Apple mobile phones do not use sapphire screens, the market has lowered expectations for sapphire screens. However, recently, sapphire screens have once again attracted market attention. Two domestic manufacturers, Huawei and vivo, have successively released sapphire mobile terminal products. Later, it was reported that Tiantong Co., Ltd.’s sapphire screens have been supplied in batches, and the future development of sapphire is still promising.
In the next annual report or semi-annual report, we look forward to all companies achieving more satisfactory results.
Anna
Anna